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· The Invisible Iron Fist
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To Fund or Not to Fund
Exploring the business behind student athletics
Jack McCluskey
Posted: 3/31/06
Boston University, with a student population of more than 30,000, is not likely to be mistaken for either Union College, with a student population less than a tenth of that, or the University of Texas, which weighs in at 50,000 students. The three schools are very different, yet they share a common ground.

The playing field.

Granted, even the playing field is different for the three schools, with BU and Union preferring ice to Texas's grass, but the schools can be compared through their sports.

BU Athletic Director Mike Lynch said that BU sees the importance of having a Division 1 caliber program, but in a different way than some other universities.

"I think BU sees the importance of inter-collegiate athletics as part of the collegiate experience," Lynch said. "[But] we don't have the national profile of all of the big schools."

Before defining BU's athletic department and its relation to the university at large, Lynch explained the three types of schools in college sports.



TO SUBSIDIZE OR NOT



"There are the [division three] institutions like Union College, where the athletic department is fully subsidized by the college," Lynch said. "There are the partially subsidized departments, which you see at schools like BU, Northeastern, UNH and Maine.

"And then there are the fully funded schools, also known as BCS schools, like the University of Miami, the University of Florida, Notre Dame and others," Lynch said.

BCS, or Bowl Championship Series, schools like the ones Lynch mentioned operate very differently from the way BU does.

Ed Goble, associate athletic director in charge of business operations at the University of Texas, said his department has always operated completely independent of the university itself.

"We are completely self-funded," Goble said. "We don't get any institutional support or any state or public money. Everything we get, we generate through our own activities."

Because of its partially subsidized structure BU's athletic department is a more significant part of the university, Lynch said.

"At a school like the University of Florida, which is a huge state institution, the athletic department is completely independent of the school's budget," Lynch said. "Meaning that to stay afloat, revenues must exceed costs.

"In order to generate the needed revenue they rely on bowl revenue [from the football team], ticket sales, basketball tournament money, sponsorships and television revenues.

"At a place like BU the athletic department is subsidized by the university. We try to generate revenue by ticket sales, sponsorships and we have a donor population that is significant and growing - but by no means do we generate those sorts of revenues [that would exceed costs]."

The decision to partially subsidize the department came both from the university and the market BU finds itself in, according to Lynch.

"BU is partially subsidized because it's the economic model that works for the institution," he said. "[And because] our programs allow us to be partially subsidized."

If Texas is one extreme, in being completely independent, then Union College is the other.

Jim McLaughlin, Union's athletic director, said in an email that "[a] majority of our funding comes from the college. Although we do generate revenue through ticket sales [and] facility rentals, we do not turn a profit.

"[Ticket sales and facility rentals] have been our most important revenue streams," he said.

McLaughlin also said while Union College offers 25 varsity sports it does not offer athletic scholarships. BU, on the other hand, awards close to 200 athletic scholarships a year, and Texas still more at approximately 260 per year.

THE FINANCES



BU spokesperson Colin Riley said the university sells tickets for only four of its twenty varsity sports: men's and women's basketball and, of course, men's and women's ice hockey.

Just under 137,000 tickets were sold for those four sports combined in the 2005-2006 season, according to Riley.

Spokespeople for BU and the other universities contacted declined to release financial information.

Assuming the majority - perhaps upwards of 100,000 seats - of those sales were generated by the men's hockey team and further, the tickets purchased were at the general public price of $22, a generous estimate of ticket sales revenue would be $2.2 million.

The actual combined figure is probably not far from that, as both ticket-prices and attendances for the other sports are lower ($9 and $6 for men's and women's basketball respectively and only $4 for women's hockey) than BU's main attraction, men's ice hockey.

The situation is different at Texas, where, Goble said, "Football is the big dog."

Goble estimated that football generates between 75 and 80 percent of Texas's total revenue either directly or indirectly. The team, which won the national title in 2005, plays in front of a packed house every game - selling every one of the 82,000 seats in Darrell K Royal-Texas Memorial Stadium.

Of those tickets, Goble estimated that 18 thousand are reserved for students, who receive a discount through their student ticket packages, meaning 64,000 or 65,000 thousand seats per game are sold at a regular price (approximately $50, though prices vary). That would bring the season total of regular-price tickets to 448,000 and the total ticket revenue to approximately $22 million.

Those revenues, while dwarfing those brought in by BU's ticket sales, only represent about a fourth of Texas's overall budget, which Goble estimated to be in the $90 million range for the upcoming year.

That ice hockey is the BU's biggest draw says something about the structure of the program and the intentions of the university with regard to athletics, according to Associate Athletic Director Rebecca Collet.

"Hockey is not usually a revenue sport," Collet said. "Baseball and football are the normal revenue sports … so I think it's interesting to see what BU achieves through its athletics, because they are investing in it themselves."

Because BU doesn't have typical revenue sports, the department has to find funding where it can. Lynch said funding for the program comes from a variety of sources including tuition, fundraising, sponsorships and real estate sales, in addition to ticket sales.

Lynch said most Division 1 programs spend about three percent of the university's total budget - but at BU the number is actually less than that.

"BU spends its money very wisely when it comes to athletics," he said.

Because of its limited budget, BU has had to face some tough decisions when it comes to whether to fund certain sports, notably the normal revenue sports of baseball and football.

"There were a number of factors related to the football program," Lynch said. "First of all the 1AA level [where BU played] is a loser financially - you are not going to generate the kind of revenue that is going to exceed expenses - in fact even at the 1A level there are only a handful of schools that are making money."

Texas is one of the few institutions that knows what it's like to make money from athletics.

"Sometimes we turn a profit, but we always at least break even," Goble said. "We have had a couple years where we made about a million dollars more in revenue than expenses, but we always stay in the black and don't operate in the red."

Women's sports also played a role in BU's decision to move away from revenue sports.

"The women's program was expanded based on the amount that the university was contributing," Lynch said. "The board decided if it was going to fund women's sports it should fund it at a high level."

Years later, the effects of that decision are clearly visible. Today there are more varsity sports for women (11) than men (nine).



DIFFERENT BUT SIMILAR



So while for some student-athletes the season ends in January, hopefully with a bowl game and a big BCS payoff for the school, and for others it ends in March, with teams battling their way through brackets to stand alone on either the ice or the parquet, there is one thing they all have in common: final exams.

"I will always tell you that academics comes first here," Lynch said. "We try to find as good a balance [as we can] between a competitive athletic department and helping our athletes be good students and become good people."

Lynch's sentiment is not novel, as one thing that all athletic departments seem to have in common is an affinity for a specific statistic.

"We are proud to have one the highest graduation rates in the country," he said. "We have obviously had a number of athletes who have gone on to have lengthy professional careers but we've also produced doctors, lawyers, dentists and social workers."

Goble said while Texas enjoys a large fan base and counts its athletic program as a big part of the collegiate experience, it is still only a part.

"Athletics is big at Texas," he said. "It's a big part of what goes on here, obviously it's not the most important part, but certainly the most visible."
 
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